I agree that the wording of letting people go will have to be very carefully done. It may make people feel insulted that you are keeping some families but terminating them when they have done nothing wrong. That is my worry.

I think giving notice in June is good. It sounds like you have put some good thought into it. Just be prepared that some people may not stay on all the way until September once you give notice. The kind thing to do is to give ample notice so that they can find a good place rather than having to pick somewhere in a panic.

I think your reasons for doing the downsizing is great. I think parents would understand your reason but not why they are being let go instead of someone else. That might sting. I think Playfelt made a good point that adding a reason might be good i.e better age compatibility with the others or the other families have been there longer or whatever could justify it if they ask. Be prepared with an answer. They will probably be surprised to find that you are staying open but terminating.

Maybe say that you want to take on more contracts and need a lighter load for that too. Good luck.

Have you thought of whether you will tell the families via a letter or in person? I think it will also be something that the other families might question you on and they might also get nervous and think you will eventually shut down. It could make them nervous and look else where too. Just things to consider I guess.